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Beware of Europeans Bearing Bailouts

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This past weekend, the European Union, in another clear demonstration of the justice and social solidarity that recently earned it a Nobel Prize, forced a "haircut" on bank depositors in Cyprus, as part of a "bailout" for the country's suffering economy. This "haircut" will take 6.75 percent from all deposits up to €100,000, while the levy on deposits over €100,000 is 9.9 percent. The claim is that this "one-time tax," as it has been called, will raise almost €6 billion to contribute towards the €17 billion "bailout" that Cyprus is receiving from the EU.

The island's new conservative and "pro-European" president, Nikos Anastasiadis, repeatedly made pre-election pledges to not accept any "bailout" that would involve a haircut of bank deposits. This promise was repeated as recently as one day before the agreement, which was reached in the early morning hours of Saturday at the Eurogroup meeting of finance ministers in Brussels.

Of course, Anastasiadis claims that he and his country were blackmailed, an assertion that is corroborated by reports that have come out of the Eurogroup meeting, where the EU reportedly was ready to take measures that would have resulted in the implosion of two Cypriot banks, if Cyprus did not agree to the "deal." Aside from the pathetic display of a national leader stating on television that he was blackmailed, however, the whole story seems to be comprised of a series of remarkable coincidences. We are supposed to believe that within a matter of hours, Anastasiadis and his government, who supposedly opposed any such haircut, suddenly realized that the country and its banking sector were facing imminent collapse. Then, we are supposed to believe that the EU just happened to be ready and waiting with a solution. And, the icing on the cake: We are supposed to believe that all of this just coincidentally occurred prior to a three-day weekend in Cyprus, which of course would provide plenty of time to prepare for the inevitable bank run.

As one can imagine, this did not sit well with the people of Cyprus, who woke up on Saturday morning with the news that a portion of their supposedly insured bank deposits had gone up in smoke. And even the financial press, much of which has been gung ho on the austerity that has been forced upon Greece, Spain, and the other suffering European economies, was not too thrilled. The response of the Financial Times, Forbes, The Economist, and The Wall Street Journal was less than enthusiastic -- perhaps because the idea of forcibly dipping into bank deposits hits just a bit too close to home for comfort. Oh, and apparently Vladimir Putin and the Russians weren't too pleased either.

Ah, yes, the Russians. A segment of the international media, plus the European Union, tried to justify this cold-blooded grab on people's bank accounts by blaming the Russians: specifically, those Russians who have stashed large amounts of money in Cypriot bank accounts for such unsavory activities as money laundering. A significant portion of deposits in Cyprus is said to originate from Russia, and the EU, in its infinite wisdom, decided that taking a percentage of everyone's deposits, Russian or not, money launderer or not, was the fair solution to this problem. No investigations or probes necessary -- everyone is guilty, even if proven innocent! Of course, similar tax and financial havens exist throughout the EU and the European continent: Switzerland, Lichtenstein, Luxembourg, Gibraltar, the Isle of Man, and the City of London Corporation, not to be confused with, well, London. Double-standard, you say? I would say yes.

Not surprisingly, such insanity has its adherents, just as the austerity that has spiraled countries like Greece into an economic depression also has its supporters. A Reuters report on the deal, republished by the vehemently pro-austerity Greek newspaper Kathimerini, was peppered with such vocabulary as "rescue" and "financial help." Another Nobel Prize winner, economist Christoforos Pissaridis, described the haircut as "the only hope" for Cyprus, just days after he had taken a public stance against just this sort of measure, in a flip-flop stunningly reminiscent of the Greek prime minister Antonis Samaras' broken pre-election promises to "renegotiate" the country's austerity agreements with the EU and IMF, and indeed, reminiscent of Anastasiadis' own flip-flop on the haircut as well. And of course, the EU itself justified its actions, with Dutch Finance Minister Jeroen Dijsselbloem describing the measures as "just," while claiming that Cyprus was not being penalized.

It should not be overlooked, though, that the EU did not mask its clear preference for Anastasiadis in the recent elections in Cyprus, just as they did not conceal their glee when the "pro-European" Samaras was elected in Greece. In the Nobel Prize-winning EU, which claims to represent the "European dream" of continent-wide unity and solidarity, it seems that what really matters is what the EU wants -- and what the EU wants is a bare disguise for what countries like Germany desire. What's to stop Germany and the EU from using this precedent to dip into deposits in Greece, Italy, or France? Who knows, they might even feel that this is the final solution for the continent's economic woes. Some may speak of a "European dream," but when the EU's supposed welfare and social justice is apparently just a flimsy facade for corporate welfare and bailouts of irresponsible bankers, it seems that this "dream" is, in fact, a nightmare. Just ask the people of Cyprus, where banks will remain shuttered for the rest of the week while deposits have effectively been hijacked.

One final footnote prior to concluding this piece: A major red card goes out to a significant percentage of the Greek populace, and particularly the Greek "clicktivists" of Twitter and Facebook. While these social networks were abuzz in Greece over the weekend, the buzz had little to do with the haircut in Cyprus, which barely registered a trickle compared to the outrage over a Greek football player making an apparent Nazi salute after scoring a goal in a league match. Clearly, the actions of one silly football player are far more destructive and threatening to the social fabric than the reality that a government can swoop in and take money out of your bank account. This, unfortunately, is another example of the stunning hypocrisy prevalent in our society and our media, and an indication that even after several years of crisis, our priorities continue to be screwed on backwards.